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Churning Bank Accounts… What You Need To Know

Many people churn credit cards but churning bank accounts is an easy way to make some extra income, mostly from home. The usual steps are; open a bank account fulfill a few requirements, get bonus, close account after 6 months, apply again in about a year.

So what stops us from opening every bank account that offers any kind of bonus? Well, ChexSystems usually and also the ability to meet requirements. Today about 80% of all banks and credit unions in the United States use ChexSystems to verify new accounts and when you read about a bank doing a soft pull, it usually means they’re looking at your ChexSystems Consumer Score.

ChexSystems, Inc. is a consumer reporting agency (i.e. similar to a credit bureau) that collects data from banks and credit unions on checking and savings account activity. ChexSystems uses this information to create tools, including consumer reports, for screening bank account applicants.

Unlike other consumer credit reports, which contain both negative and positive financial information, Chexsystems reports only reflect negative information. If you have no ChexSystems report then you either have no deposit account history or you’re in “good standing” status. If a person commits check fraud or leaves their account with a negative balance, it will be listed there. In addition, the simple act of opening or closing a bank account may be recorded in their database. And this is what should make you a but selective on the bank accounts that you chose to open.

If you open too many bank accounts in a short period of time, you will start getting declined for further bank account application. Too many application will raise red flags because banks are mainly worried about a type of fraud called check kiting. This is when people with many bank accounts write checks with insufficient funds between different banks to create an temporary surplus of money from the bank’s funds availability policies.

I have opened many bank accounts and besides the bonuses, there’s also another plus. You’ll realize that not all banks are the same and you’re current account might not have the best perks and customer service. There’s usually little differences from one bank to the other but when you deposit a lot of checks and do a lot of transfers, those differences add up.

How to pick your bonuses

A good rule of thumb is that you should go for bonuses of $100 and up. Then take into consideration the requirements for the bonus. If you’ll need to have a few thousand dollars tied up for a few months, then maybe a $100 bonus isn’t enough. Also think about monthly fees and what it takes to have them waived.

Another reason to hold out for $100+ bonuses is because you cannot open endless bank accounts. Eventually you will start getting declined. Normally you would be safe with about 10 account per year, but there is no guaranteed safe number. I’ve only been declined once from Ridgewood Savings Bank so far, and even then I was told I had to open the account in branch for fraud prevention purposes. I usually apply for over 10 accounts per year, maybe close to 15.

When you apply for a new account you should also always check whether the bank does a soft or hard pull. If the bank does a hard pull, then the bonus has to be a few hundreds to make it worth. If it’s less then you’re better off just applying for a credit card with a sign up bonus.

Be organized and read the fine print

Once you start opening bank accounts, for yourself an maybe family members, you’ll soon realize that keeping track of everything becomes overwhelming. If you’re just starting out, you should create an excel file or any type of list, where you can note opening dates, requirements, monthly fees and requirements to avoid them if possible, closing dates, whether you’ve received the bonus and when and possibly other things.

Closing dates are helpful because you’ll need them to figure out if you’re eligible for an account bonus which you’ve already received in the past.

Being able to change your direct deposit often is a great plus in bank account churning. You might want to start going out for drinks with that HR buddy even if it seems like you have nothing in common. However bank transfers will usually qualify as direct deposits.

Use Mint, Google Calendar and tools to keep track of balances, deposits, dates etc. because things can get messy quickly and service/insufficient funds fees will add up.

How much can you earn?

It’s difficult to put an exact number on the amount you can make in a year from churning bank accounts. I can give you an idea of whats possible from my experience. This is what bank bonuses I might earn in a year (I’ve included links to related posts, but not all are currently available and not all are the best possible bonuses out there, just the most recent). Keep in mind that this is from 2015 and some are location specific:

That’s over $2000 and if you do the same for your significant other, that’s probably close to $5000 a year. You might be able to earn more, or maybe less, and it might vary from year to year. And there’s other types of accounts that can earn you miles, such as Citigold.

Can you open a bank account with a ChexSystems record?

Not all banks use Chexsystems to open accounts but they may run a credit report, use EWS or Telecheck. A No Chexsystems bank may also have a Second Chance Account allowing consumers with Chexsystems records to open accounts. Such accounts would be Discover Online Savings, Capital One 360 Checking etc..

Chexsystems Facts

You’re entitled to a free copy of your report once every 12 months

If you’re denied a bank account due to negative records on ChexSystems, you have the right to receive a free report at that time

Hey Danny, first off great article by the way! I am curious to know which bank have you churned the most year in and year out? For me, I have churned Chase Bank bonuses for the past 6 years and honestly it just really depends which branch you walk in and as long as they don’t look up your past history of account openings with them since they mainly do soft pulls.